Unilever Sales Rise on Ice Cream, Emerging-Market Demand -- Update

By Saabira Chaudhuri 

LONDON--Unilever PLC on Thursday said its third-quarter revenue rose sharply as sales of ice cream jumped and the company logged strong growth in emerging markets.

The maker of Magnum ice cream and Dove shampoo reported sales growth on an underlying basis--which strips out the impact of acquisitions, disposals and exchange-rate changes--of 5.7% in the three months to end-September, up sharply from 2.1% growth in the same period a year earlier.

Unilever said results were helped by an easy comparison with a year-earlier quarter in which revenue in China was hit when Unilever had to reduce the volume of products it supplied to big retailers there after overestimating demand. Better weather helped drive strong growth in demand for ice cream while price increases in Latin America also boosted sales.

Unilever said it expects underlying sales growth for the year toward the upper end of the 2% to 4% range it had previously disclosed.

Exane BNP Paribas analyst Jeff Stent described quarter as "very good."

Unilever's exposure to emerging markets--where the Anglo-Dutch consumer-products giant makes the bulk of its sales--has held it in good stead for years but recently a slowdown in markets like Brazil, China and Russia has kept a lid on growth.

The group's third-quarter showed a partial reversal of that trend, with China's results helped by the easy comparison with the year earlier. The company also logged stronger growth in Russia and better volumes in India as well as in Latin America where volume growth accelerated "despite challenging macroeconomic conditions and consumer incomes being squeezed by currency devaluation."

On an underlying basis, sales growth in emerging markets strengthened to 8.4% from 5.6% a year earlier.

In developed markets, underlying sales growth was 2.1%, compared with a 2.5% decline a year earlier. North America returned to growth driven by both volume and price, while Unilever also saw good growth in the U.K., Germany and Central and Eastern Europe.

Overall revenue climbed 9.4% to EUR13.4 billion ($15.4 billion), including a positive currency impact of 2.9%. Profit figures weren't disclosed.

The company has been pushing deeper into personal-care products like shampoo and deodorants with appeal across different markets, and away from slower-growing food brands. Personal care revenue climbed 6.2% on an underlying basis, while revenue from foods rose 1.6% on this basis.

Unilever last year created a prestige division, which sells high-end cosmetics and personal-care products and currently makes about EUR400 million in annual sales. Chief Financial Officer Graeme Pitkethly is targeting raising the unit's sales to EUR1 billion, recently saying Unilever sees a large opportunity in the fragmented EUR33 billion market for skin and hair care.

In refreshments--essentially the tea and ice cream businesses--underlying sales jumped 8.5% while in home-care they rose 6.6%.

Unilever Chief Executive Paul Polman said the company's ice cream unit performed particularly well in the quarter. Unilever has muscled deeper into the ice cream business of late, earlier this month saying it had bought Italian artisan ice cream maker Grom.

Write to Saabira Chaudhuri at [e-mail]

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(END) Dow Jones Newswires

October 15, 2015 03:51 ET (07:51 GMT)

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